What Does It Mean When the Farm Bill Expires?

This Sunday, the deadline will expire on the current farm bill. Many programs will revert back to the 1949 permanent legislation. However, provisions in the continuing resolution will keep food stamps, crop insurance, farmer subsidy programs and other funding streams moving through the system. That continuing resolution sets the USDA budget and will allow full funding for most current programs.

One program that will suffer on Sept. 30 is the Milk Income Loss Contract program, which compensates dairy farmers during times of low milk prices, according to the American Farm Bureau Federation. Dairy price support and export incentives expire on Dec. 31.

MILC already began providing coverage at a reduced level on Sept. 1. Currently, the program offers farmers coverage at 34 percent of the difference between the target price and the actual price instead of the previous 45 percent. Also, the volume cap declined to 2.4 million pounds per dairy farmer from nearly 3 million pounds.

A few other programs, including export market promotion and support, do stand to expire on Sunday.

The larger issue concerns federal price supports. Those prices, the rates at which the government pays for certain commodities, would revert back to 1949 levels. For the most part, those were much higher, especially in areas like wheat ($13.58 per bushel in 1949, more like $6 today) and dairy products ($38.63 per hundredweight in 1949, closer to $10 today). The government would pay much more for those commodities, though not all of them; federal price supports for things like soybeans didn’t exist in 1949. This will absolutely drive up the price that businesses will have to pay for the same commodities, and that will factor into your monthly food bill.

However, because of harvest periods and the fact that 2012 crops are covered by the outgoing farm bill, this will mostly not have an impact in the marketplace until next year.

“We actually have until about Jan. 1 before we run into a lot of administrative problems with this bill reverting to some very high prices,” says Mary Kay Thatcher, director of congressional affairs for the American Farm Bureau Federation […] The first crop that would be affected by the new price supports “would be next spring when we harvest winter wheat,” Thatcher says […]

When was the last time Congress let the farm bill lapse? The last time it was up for renewal: 2007. “The bill expired on Sept. 30, and we didn’t pass the first extension until the 26th of December,” says Thatcher. “And then I think it was extended another four or five times after that before we finally got the actual bill done.”

In other words, this is not uncharted territory, and the end date for the farm bill for most farmers in reality is December 31 rather than September 30.

But the other concern that the industry and even Secretary of Agriculture Tom Vilsack have is that this puts farm programs much closer to the chopping block in any deficit reduction scenario:

Agriculture Secretary Tom Vilsack said Monday House Republican leaders had the support to pass a farm bill but they decided to delay a vote until after the November election when they could make even deeper cuts to agricultural programs […]

This “is House leadership’s plan to, I think, substantially reduce the farm safety net. Not just nutrition assistance but also conservation, crop insurance and commodity programs,” Vilsack said. He added that he believed the bill had the necessary support to pass in the House.”

“There is no other reason not to have put a farm bill up for a vote. If you have the votes and you have the time, and you have a House (Agriculture) Committee bill why wouldn’t you put it up for a vote unless you wanted steeper cuts and you didn’t want to have those conversations before an election,” said Vilsack.

This seems a bit alarmist. Just because programs are in place doesn’t mean Congress can’t change those funding levels. So they could whack Ag subsidies after the election in a grand bargain whether the farm bill was passed or not. There’s not much to stop them. The absence of a bill might make it easier, as you could fold the bill into the vehicle for the grand bargain, and pick up members of Congress who want to see alterations in the farm bill in the process. But passing a bill wouldn’t insulate agriculture from cuts, either.

Finally, disaster assistance as fallout from this summer’s drought was contained in the House and Senate versions of the farm bill. That won’t go out, and a stopgap disaster relief bill in the House never got taken up by the Senate. So livestock producers in particular, ravaged by the drought and the high cost of feeding their animals, will get no relief.

What Does It Mean When the Farm Bill Expires?

This Sunday, the deadline will expire on the current farm bill. Many programs will revert back to the 1949 permanent legislation. However, provisions in the continuing resolution will keep food stamps, crop insurance, farmer subsidy programs and other funding streams moving through the system. That continuing resolution sets the USDA budget and will allow full funding for most current programs.

One program that will suffer on Sept. 30 is the Milk Income Loss Contract program, which compensates dairy farmers during times of low milk prices, according to the American Farm Bureau Federation. Dairy price support and export incentives expire on Dec. 31.

MILC already began providing coverage at a reduced level on Sept. 1. Currently, the program offers farmers coverage at 34 percent of the difference between the target price and the actual price instead of the previous 45 percent. Also, the volume cap declined to 2.4 million pounds per dairy farmer from nearly 3 million pounds.

A few other programs, including export market promotion and support, do stand to expire on Sunday.

The larger issue concerns federal price supports. Those prices, the rates at which the government pays for certain commodities, would revert back to 1949 levels. For the most part, those were much higher, especially in areas like wheat ($13.58 per bushel in 1949, more like $6 today) and dairy products ($38.63 per hundredweight in 1949, closer to $10 today). The government would pay much more for those commodities, though not all of them; federal price supports for things like soybeans didn’t exist in 1949. This will absolutely drive up the price that businesses will have to pay for the same commodities, and that will factor into your monthly food bill.

However, because of harvest periods and the fact that 2012 crops are covered by the outgoing farm bill, this will mostly not have an impact in the marketplace until next year.

“We actually have until about Jan. 1 before we run into a lot of administrative problems with this bill reverting to some very high prices,” says Mary Kay Thatcher, director of congressional affairs for the American Farm Bureau Federation […] The first crop that would be affected by the new price supports “would be next spring when we harvest winter wheat,” Thatcher says […]

When was the last time Congress let the farm bill lapse? The last time it was up for renewal: 2007. “The bill expired on Sept. 30, and we didn’t pass the first extension until the 26th of December,” says Thatcher. “And then I think it was extended another four or five times after that before we finally got the actual bill done.”

In other words, this is not uncharted territory, and the end date for the farm bill for most farmers in reality is December 31 rather than September 30.

But the other concern that the industry and even Secretary of Agriculture Tom Vilsack have is that this puts farm programs much closer to the chopping block in any deficit reduction scenario:

Agriculture Secretary Tom Vilsack said Monday House Republican leaders had the support to pass a farm bill but they decided to delay a vote until after the November election when they could make even deeper cuts to agricultural programs […]

This “is House leadership’s plan to, I think, substantially reduce the farm safety net. Not just nutrition assistance but also conservation, crop insurance and commodity programs,” Vilsack said. He added that he believed the bill had the necessary support to pass in the House.”

“There is no other reason not to have put a farm bill up for a vote. If you have the votes and you have the time, and you have a House (Agriculture) Committee bill why wouldn’t you put it up for a vote unless you wanted steeper cuts and you didn’t want to have those conversations before an election,” said Vilsack.

This seems a bit alarmist. Just because programs are in place doesn’t mean Congress can’t change those funding levels. So they could whack Ag subsidies after the election in a grand bargain whether the farm bill was passed or not. There’s not much to stop them. The absence of a bill might make it easier, as you could fold the bill into the vehicle for the grand bargain, and pick up members of Congress who want to see alterations in the farm bill in the process. But passing a bill wouldn’t insulate agriculture from cuts, either.

Finally, disaster assistance as fallout from this summer’s drought was contained in the House and Senate versions of the farm bill. That won’t go out, and a stopgap disaster relief bill in the House never got taken up by the Senate. So livestock producers in particular, ravaged by the drought and the high cost of feeding their animals, will get no relief.